Law:

Section:

Section 184 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922], read with rules 2 and 6 of the Indian Income-tax Rules, 1922 - Firm - Position prior to 1-4-1993 - Assessment year 1956-57 - Assessee firm's application under section 26A of Act 1922 for renewal of registration was rejected on ground that minor who attained majority and who had not opted to go out of partnership had not signed said application as full fledged partner - Whether application in question was rightly rejected having regard to requirement of rules, 2 and 6 of Rules 1922, read with section 26A of Act 1922 - Held, yes FACTS The assessee firm was consisting of two partners. One 'O', a minor, was also admitted to the benefits of the partnership, and it was agreed between the partners that after giving 10 per cent of the benefits to the minor, they would divide the remaining profits in certain proportions and that, should losses occur in the business of the partnership, the minor shall not be responsible for the same. The firm had applied for registration under the Act of 1922 for the first time during the assessment year 1950-51 and had obtained renewal thereof for the succeeding years 1950-51 to 1955-56. The minor, 'O' attained majority on 5-9-1955. An application for renewal of the registration with respect to this partnership for the assessment year 1956-57 was made on the 15-6-1956. This application was signed by the two partners, only and although 'O' had become a major on the 5-9-1955, it did not bear his signatures. The ITO refused registration for the year in question on the ground that as 'O' had become major and he had not opted to go out of the firm, he must be treated as having elected to have become a full-fledged partner and, that being so, the application for renewal must have been signed as much by him as by the two partners under section 26A of the Act 1922 read with rule 6 made under section 59 of Act 1922 thereof. In this view of the matter the application for registration having been refused by the ITO. Appeal of assessee against the order of ITO was dismissed both by the AAC and the Tribunal. On reference : HELD The language of…

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